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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK

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GREATER NEW YORK TAXI ASSOCIATION, and EVGENY FREIDMAN, Plaintiffs, - againstTHE STATE OF NEW YORK, THE NEW YORK STATE ASSEMBLY, THE NEW YORK STATE SENATE, ANDREWM. CUOMO, in his official capacity as Governor of New York, THE CITY OF NEW YORK, MICHAEL R. BLOOMBERG, in his official capacity as Mayor of the City of New York, the NEW YORK CITY TAXI AND LIMOUSINE COMMISSION, a charter-mandated agency, and DAVID YASSKY, in his official capacity as Chairman and Commissioner of the New York City Taxi and Limousine Commission, Defendants.
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Index No. I02.1~2012

COlVlPLAINT

Plaintiffs, by and through their attomeys,Mintz as follows:

& Gold LLP, for their complaint allege

PRELIMINARY STATEMENT
1. The plaintiff Greater New York Taxi Association ("GNYTA") is an association

representing the owners of approximately 1500 taxicab medallions operating in New York City. 2. In this action, GNYTA and one of its members, seek a declaration that a recently

enacted state law directly affecting the rights of medallion owners is unconstitutional under the New York State Constitution.

In addition, the regulations promulgated by the defendant New

York City Taxi and Limousine Commission (the "TLC") are not authorized by the challenged statute and hence are ultra vires. Plaintiffs also seek an injunction prohibiting defendants from carrying out any acts in furtherance of the unconstitutional law. 3. The law, Chapter 9 of the Laws of 2012 (Assembly 8691A1Senate 6118A) (the

"Hail Act"), radically alters the licensing and regulatory system governing the New York City medallion taxicab and for-hire vehicle industries. Clearly, the Hail Act is a law that effects and regulates an industry confined to New York City, and was passed despite the fact that the New York City Council (the "City Council") never provided a Home Rule message supporting the law, as required by the New York State Constitution. 4. The Hail Act provides for 18,000 licenses ("HAIL Licenses"), which allow license

holders to accept street hails in New York City outside of Manhattan's central business district, and outside of the city's two major airports. Thus, the law usurps local laws passed by the City Council authorizing only medallion taxicab drivers, and not livery drivers, to pick up passengers hailing vehicles on the street. 5. The Hail Act goes beyond merely authorizing a formerly prohibited activity. The

enactment represents an attempt by defendant Mayor Michael R. Bloomberg ("Bloomberg"), aided by the State Legislature, to circumvent the local legislative process and the City Council, which did not support these changes to the taxicab and livery industries. 6. Bloomberg initially proposed this legislation in his 2011 "State of the City"

address, and the TLC at that time admitted that it could only become law if it garnered support from the City Council. When it became clear, however, that such support would not be forthcoming, Bloomberg initiated a concerted lobbying effort to convince the State Legislature to pass the Hail Act without City Council approval.

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7.

Notwithstanding the lack of City Council approval and a request by that local

legislative body for the State to act, the Hail Act represents a drastic change in the regulation of taxis and liveries exclusively within New York City. 8. In addition, the TLC lacks both the funding and the will to properly enforce the

Hail Act's provisions. The TLC has proposed to add a small number of enforcement agents; this increase, however, will still make it virtually impossible for the TLC to prevent HAIL licensed livery drivers from picking up street hail passengers in the zone reserved for the medallion cabs. Indeed, the number of enforcement agents will still be far below the number of agents employed during the Dinkins administration, when there were far fewer cabs and livery cars operating. 9. In addition, the lack of enforcement resources will enable the livery cars to

operate without proper meters, GPS, or credit card machines that the new law's proponents are touting as significant benefits of the Hail Act. The lack of funding or will to properly enforce the Hail Act further demonstrates why the act violates the Home Rule provision of the State Constitution. 10. In short, the Hail Act (i) disregards the New York City governmental separation

of powers enshrined in the City Charter, shifting the power to determine the number of taxicabs and liveries on the road from the City Council to the Mayor and his TLC; (ii) impinges on the City of New York's authority to regulate the number of taxicabs and livery vehicles on New York City streets; and (iii) allocates revenues from the City's limited budget without consulting the local legislative body or complying with any City budgetary procedures. Yet, the City Council never provided a Home Rule Message supporting this legislation. Therefore, the Hail Act violates the Home Rule Provision of the New York State Constitution. 11. The Hail Act also unfairly favors one group over another in violation of the New

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York State's Constitution's Exclusive Privilege clause. Only current livery drivers and livery vehicle owners specified may purchase HAIL Licenses (and only bases specified in the law may legally affiliate with the license holders ("HAIL Bases")). 12. The Hail Act also represents an unconstitutional taking without due process. The

law authorizes a drastic increase in the number of livery drivers and taxicabs on the roads indeed, the single largest increase in the number of medallions issued since 1937. The law also, for the first time, freely grants the right to pick up passengers by street hails to thousands of licensees who will have paid virtually nothing for it. This right has always been exclusive to medallion owners, who each have paid up to one million dollars for the right to accept street hails throughout New York City. 13. The Hail Act is thus contrary to the justified expectations of medallion holders,

such as members of GNYTA, who have reasonably relied on provisions of law that secure to them the exclusive the right to pick up passengers by street hail. The law threatens the livelihood of these medallion owners, including plaintiff Evgeny Freidman. Indeed, because many medallion owners relied on extensive financing to purchase their medallion, the law may even place medallion holders in the position of owing more to lenders than their medallions are worth. 14. Moreover, the insufficient and inadequate lack of funding and commitment to

enforcing the Hail Act will result in even greater harm to and devaluation of medallions. Livery cabs will be able to earn fares both through pre-arranged calls and through street hails, and will also be able to pick up street hails in Manhattan and poach on medallion-exclusive territory. The public will likely be confused as to when and where the new livery hail cars can pick up a hail, and without proper enforcement medallion cabs will suffer by this encroachment. Lack of proper enforcement will also enable the HAIL Licensed livery cabs to circumvent very strict

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requirements that all medallion cabs must comply with. For example, all medallion cabs and cars with HAIL Licenses must install fare meters, GPS location systems, and credit card machines. 15. Enforcement has already been extremely lax. For example, during the 1980s, the

City was seizing approximately 1,000 cars per month. Currently, the City only seizes 1,000 per year. In addition, in light of the small number of enforcement agents and the fact that enforcement is conducted on a 24 hour basis, at any given time, there may be as few as 20 agents on duty in the entire City. The problem with lack of enforcement will only be exacerbated by the Hail Act's additional licensing of 18,000 livery cars, 2,000 more medallion cabs and the unrealistic prohibition of livery hail cars from picking up street hails only in certain areas of the City. 16. The Hail Act also disregards New York State environmental law. The drastic

increase in the number of vehicles picking up passengers on the streets will have significant harmful effects on traffic and air quality. In New York, governmental entities must conduct a thorough review of the environmental and other impacts of proposed projects. This is codified in the State Environmental Quality Review Act ("SEQRA"). In spite of this Act and clear State

policy, no appropriate SEQRA review has been conducted of the environmental or economic impacts of adding up to 18,000 new HAIL Licenses in the Hail Act. Moreover, the TLC has taken the arbitrary position that a review is required regarding the issuance of 2,000 medallions, but not for the issuance of the 18,000 HAIL Licenses and accompanying base permits. 17. In addition, the TLC has promulgated a number of improper rules relating to the

Hail Act's implementation. Indeed, as late as May 17, the TLC was proposing amendments to the rules, which is a clear sign of the difficulty the TLC faces in implementing and enforcing the Hail Act's provisions. In fact, the public hearing on the proposed changes is not scheduled to

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take place until June 21,2012, which is AFTER the TLC has stated it will begin to issue livery HAIL Licenses. 18. A major issue facing the TLC is how to ensure that 20% of the HAIL License cars

are handicap accessible. The law mandates that before additional HAIL Licenses can be issued,
20% of the already-issued licenses must have handicap accessible cars. The TLC rules provide

for grace periods that are in contravention of the terms of the Hail Act. Moreover, owners of accessible medallions have no similar grace period, and cannot operate their cabs until they are fully accessible. 19. The proposed rules would also give benefits to Paratransit bases that obtain HAIL

Base permits and designate a number of their ambulettes as Hail Liveries. For example, the rules eliminate the retirement age and mileage requirements of the vehicles. There is no authority in the Hail Act for selling HAIL Licenses to Paratransit companies because they are not currentlylicensed livery drivers. The law requires one HAIL License per licensee and the law does not authorize Paratransit Bases to have any HAIL Base permits. 20. The rules also require older, less efficient cars to be inspected for pollution

emissions less often than medallion cabs, which are newer and more efficient. These actions demonstrate the need for a full SEQRA study and review of the Hail Act and the rules promulgated thereunder. 21. The TLC is improperly promulgating these rules to intentionally circumvent the

Hail Act's requirement that 20% of livery hail licenses have handicapped accessible cars by including ambulettes (which are all already handicap accessible) associated with a HAIL Base, even though as a practical matter, no ambulette is going to pick up a hailing passenger.
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The TLC thus is acting outside of and in contravention of the Hail Act's

taxicab fleets in New York City. GNYTA consists of 7 member fleets and approximately 1,500 yellow medallion taxis; representing almost twenty percent of all corporate medallions. GNYT A members purchased their medallions in reliance on the representation that medallions provide their owners with the exclusive right to pick up street hails within the entire City of New York. 24. Plaintiff Evgeny Freidman ("Freidman") is a resident of the State and City of

New York. Freidman purchased a substantial number of medallions from the City of New York the last two times that the City conducted auctions for the purchase of medallions in 2003 and 1996. In addition, Freidman currently owns indirectly a number of medallions. 25. The State of New York is the state government of New York, including the New

York State Assembly, the New York State Senate, and Andrew M. Cuomo, in his official capacity as the Governor of the State of New York, and includes all subordinate offices. 26. Defendant New York State Assembly is one house of the New York State

Legislature, responsible in part for introducing and passing laws consistent with the mandates of the New York and United States Constitutions, and all other applicable laws and treaties. 27. Defendant New York State Senate is one house of the New York State

Legislature, responsible in part for introducing and passing laws consistent with the mandates of the New York and United States Constitutions, and all other applicable laws and treaties. 28. Defendant Andrew M. Cuomo is the Governor of the State of New York.

Governor Cuomo is the chief executive officer of New York State, responsible for executing the State's laws and approving or vetoing the legislative bills presented to him. Plaintiff brings this

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action against Governor Cuomo in his official capacity. 29. Defendant Michael R. Bloomberg is sued in his official capacity as the Mayor of

the City of New York. At all times relevant hereto, Bloomberg was responsible for direction and oversight of the TLC and the implementation of its policies. 30. Defendant City of New York ("City") is a municipality organized and existing

under the laws of the State of New York. At all times relevant hereto, defendant City, acting through the TLC, was responsible for implementing the state law challenged in this case. 31. Defendant New York City Taxicab & Limousine Commission is an administrative

agency for the City of New York, created by § 2300 of the City Charter. The TLC's purpose is, inter alia, to regulate the taxi and limousine industry and to establish "standards for driver safety, standards for equipment safety and design; [and] standards for noise and pollution control." N.Y.C. Charter § 2300. 32. At all times relevant hereto, the TLC is responsible for implementing the Hail Act.

The TLC is controlled by Bloomberg. The TLC consists of nine members, all of whom are appointed by the Mayor with the advice and consent of the City Council. Eight of the nine members are unsalaried Commissioners. The salaried Chair/Commissioner, currently Defendant David S. Yassky ("Yassky"), is designated by the Mayor to be the head of the agency. 33. Defendant Yassky is sued in his official capacity as the Commissioner, Chair, and

Chief Executive Officer of the TLC. Yassky has held that position since March 2010 when he was nominated by Bloomberg as his designee for a seven-year term. At all times relevant, Yassky is responsible for implementing and enforcing the state law challenged in this case; including proposing rules that are being considered by the TLC Board of Commissioners to implement the provisions of the Hail Act.

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VENUE
34. Venue is proper in New York County under §§ 504, 505, and 506 of the New

York Civil Practice Law and Rules ("CPLR") because the cause of action arose in New York County, and where the Mayor and the TLC have their principal offices.

FACTS
A.

BACKGROUND The yellow cab industry is a critical component of mass transportation in New

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York City and a vital aspect of the private business economy in the City. The City's 13,237 taxicabs - more than 5,000 of which are individually owned and operated - provide approximately 240 million rides per year and generate more than $2.5 billion in fares annually. 36. Prior to passage of the Hail Act, the State never altered the number of taxicabs

available in New York City or in any way attempted to regulate New York City taxicabs without express approval from the City of New York, acting through the passage of a local law . 37. A taxicab medallion is a transferable license that authorizes a vehicle to pick up

passengers in response to street hails. Each medallion owner is issued a metal plate by the TLC, which displays the medallion number of the owner's taxicab. TLC regulations require licensed taxicabs to be painted yellow, so medallion taxicabs are also known as "yellow cabs." 38. Section 181 of New York State's General Municipal Law, originally enacted in

1956, expressly authorizes cities, towns and villages to enact ordinances licensing, limiting the number of, and regulating taxicabs. This law has not been repealed. 39. Consistent with its delegated authority to license and regulate the taxicab industry,

New York City granted medallion taxicabs the exclusive right to accept street hails from passengers in 1957.

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40.

In or about 1969, the New York City Charter was amended to create the TLC.

The Charter granted to the TLC broad powers to license and regulate vehicles for hire, but reserved the power to increase the number of medallion taxicabs only to the City Council. Under the City Charter, neither the Mayor nor the TLC can issue additional taxicab medallions without the passage of a local law: "Additional taxicab licenses (medallions] may be issued from time to time only upon the enactment of a local law providing therefor." N.Y.C. Charter § 2303(b)( 4). 41. The City Council has enacted multiple local laws that secure to taxicabs the

exclusive right to accept street hails from passengers anywhere in the City of New York. See N.Y.C. Admin. Code § 19-504(a)(l) ("No motor vehicle other than a duly licensed taxicab shall be permitted to accept hails from passengers in the street"); id. § 19-507(a)( 4) ("No driver of a for-hire vehicle shall accept passengers unless the passengers have engaged the use of the forhire vehicle on the basis of telephone contract or prearrangement"); id. § 19-516(a) ("Por-hire vehicles may accept passengers only on the basis of telephone contract or prearrangement"). 42. The TLC licenses and regulates for-hire vehicles, such as livery vehicles, as well

as taxicabs. Prior to the passage of the Hail Act, for-hire vehicles were prohibited from accepting passengers except by radio dispatch calls (also called "prearrangement"). Passengers were required to contact licensed bases, usually by telephone, and vehicles were dispatched to their locations. 43. The number of medallions has rarely been increased. One issuance occurred in

1996, adding approximately 400 new medallions, and another happened over three years following 2003, adding approximately 1,050 new medallions. Each issuance occurred only after a Home Rule message was issued by the City Council. The City Council took the lead in those issuances, with assistance from the State Legislature. In addition, each time the number of

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medallions was increased, a review under was SEQRA was conducted. 44. New York City requested that the 1996 and 2003 medallion increasesalso be

authorized by the State Legislature in order to allow the City to sell the medallions at auction, for a price substantially above the cost of licensure, because any sale above the administrative cost is considered a tax, which requires State approval. The State, however, could not have passed the 1996 or 2003 medallion increases without a Home Rule message from the New York City Council. 45. The Hail Act represents the largest increase in the number of medallions available

for purchase since 1937, as well as the largest increase ever in the number of vehicles permitted to accept street hails. 46. Until the passage of the Hail Act, only the 13,237 yellow taxicabs with medallions

had the exclusive right to pick up "Streethail passengers. These yellow taxicabs charge metered fares set by the TLC. In contrast, licensed for-hire vehicles, including livery vehicles must charge agreed upon, un-metered, fares. 47. In large part because only holders of medallions have the exclusive right to accept

hails from passengers in the street from any location within the City of New York, medallions have been valuable investments, recently selling for between $700,000 and $1,000,000. As detailed above, the exclusivity of this right is reaffirmed by no fewer than three explicit provisions of the Administrative Code. 48. Taxicab medallions can be transferred at fair market value to any buyer who

meets qualifications established by the TLC, pursuant to the New York City Charter and State law. They can also be used as collateral for loans. Purchasers of taxicab medallions include individuals and businesses that have owned their medallions for a considerable period of time,

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others who purchased their medallions from existing owners at a fair price as determined by the parties, and more than 1,000 owners who have purchased their medallions directly from the City of New York since 1996. 49. In making the significant business decision to purchase a taxicab medallion, these

owners and prospective owners relied upon the Administrative Code provisions that only medallion holders can pick up street hails within the entire City. A medallion is a valuable asset, and ownership decisions require considerable deliberation as well as a major financial investment. 50. The income that can be derived from an investment in a medallion, ultimately a

license to operate a demand-responsive street hail business in the City of New York, is a factor with a significant impact on the asset's value. A decline in income from street hails would have a pronounced effect upon the value of medallions. B. 51. THE MAYOR'S END RUN In early 2011, Bloomberg announced that he would seek changes in the existing

taxicab and livery regulatory system. He proposed that, for the first time in New York City history, non-medallion for-hire vehicle drivers, many of whom have operated illegally for decades, be permitted to accept street hails in most locations. He cited a need to provide more service to persons within four of the five boroughs of the City as justification for this proposed change in policy. 52. proposal. In the months that followed, the City Council would not support Bloomberg's Indeed, The New York Times reported that the City Council "appeared reluctant" to

pass the Mayor's proposal. Bloomberg and his staff then initiated a behind-the-scenes lobbying effort to convince the State Legislature to pass the new law without City Council approval.

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53.

Legislation was introduced in the closing days of the state legislative session in

June 2011, and a billwas passed at the eleventh-hour of that session by the State Senate and Assembly without a single hearing, public debate, or a Home Rule message from New York City. As was widely reported, the Mayor and TLC Commissioner lobbied extensively in Albany for passage of this bill. On June 21, 2011, the New YorkState Assembly passed A8496 and the identical bill, S5825, passed the New York State Senate on June 24,2011. 54. The resulting bill was so flawed that the Governor did not act upon it until

December 21,2011. Finally, the Governor signed this bill only after the leaders of the Senate and Assembly agreed to rewrite the bill in the form of a subsequent Chapter Amendment. The result was another poorly conceived bill that will irreparably damage the livery and taxicab industries, as well as deprive New York City residents of the demand-responsive transportation services they currently enjoy. C. 55. THE HAIL ACT When the Governor signed the 2011 bill on December 21 st, he issued an approval

memo that stated that the bill was "not acceptable" and that the Legislature had agreed to pass a Chapter Amendment; accordingly, the Governor stated "With this agreement made, I approve this bill." 56. As required by the Governor's approval memo, the Chapter Amendment was

proposed in the Assembly on December 28,2011 as A-8691. The Assembly passed it on January 23,2012. The same bill, S6118-A, passed the Senate on February 6,2012. That Act was signed

by the Governor on February 17, 2012 and became Chapter 9 of the Laws of 2012. Like the 2011 Law, the 2012 Hail Act was passed without a Home Rule message from the City Council. 57. The Hail Act creates a new license, called a "Hail Accessible Inter-borough

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License" or "HAILLicense," and authorizes the TLC to issue up to 18,000 HAIL Licenses. These licenses permit the holders to accept hails from passengers on the street anywhere in New York City, except that portion of Manhattan below East 96th Street and West 110th Street ("Central Manhattan") and John F. Kennedy and LaGuardia Airports. These vehicles are also permitted to accept radio dispatch calls from any location within New York City except Central Manhattan, and may even discharge fares within the zone where pick-ups are prohibited, making enforcement difficult; if not virtually impossible given the level of lax enforcement by the TLC. 58. To permit HAIL License holders to accept street hails, the Hail Act amends

Administrative Code § 19-507(a)(4) and § 19-516(a), both of which prohibit livery vehicles from accepting street hails. Indeed, the Hail Act thus amends, by State fiat, and without any Home Rule message, Administrative Code §§ 19-506, 19-507, 19-512.1, and 19-516, which were approved by the City Council and signed into law by previous mayors. 59. The Hail Act mandates that six thousand HAIL Licenses be part of the "first

issuance." Tthese licenses must be issued within twelve months from the date on which the first HAIL License is issued. Twelve months after the first issuance, the TLC may conduct a second issuance of 6,000 additional HAIL Licenses. One year after that, the TLC may conduct a third issuance of 6,000 additional HAIL Licenses. Twenty percent of HAIL licenses issued must be limited to vehicles accessible to persons with disabilities. 60. Section 5 of the act provides that for the first three years of issuance, HAIL

Licenses are limited "only to owners of for-hire vehicles or for-hire drivers who have been licensed by the TLC for at least one year and are in good standing with the TLC," i.e. those holding a TLC license to accept radio dispatch calls. The only exception is that an accessible license that is not sold within three months of the first issuance may be sold without such

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restrictions. The privilege of a HAIL License is unavailable to anyone else. 61. This group oflicensed livery drivers contains many persons who have been

accepting street hails notwithstanding the fact that it has been illegal to do so. The Hail Act rewards these lawbreakers, whose unlawful activity has been possible in large part because of lax or no TLC enforcement. 62. The Hail Act also authorizes the TLC to provide 450 HAIL base permits to for-

hire base stations. Each HAIL Licensee is required to affiliate with one of the holders of a HAIL Base permit. HAIL Base permits cost $3,000, are non-transferable, and are valid for three years, with an automatic right to renewal if the base station is in good standing. Initially, only existing for-hire vehicle base stations that have operated for at least three years and are in good standing with the TLC can obtain a HAIL Base permit. A base station is defined in the New York Administrative Code as a "central facility which manages, organizes or dispatches affiliated vehicles licensed under this chapter, not including luxury limousines or black cars." 63. Section 8 of the Hail Act also authorizes the City of New York "acting by the

mayor alone," to sell 2,000 new taxicab licenses (medallions) to vehicles that are accessible to individuals with disabilities, in direct contravention of the Charter of the City of New York that provides additional taxicab medallions may only be issued upon the passage of a local law. 64. The Hail Act requires the TLC to provide up to $54,000,000 from the City of New

York's budget in grants of up to $15,000 to each purchaser of a HAIL license that is restricted to vehicles accessible to persons with disabilities. Such grants are to be used to purchase an accessible vehicle or retrofit a vehicle to be accessible. The State of New York is providing no funding for this grant program. The grants are not available to taxicab medallion owners who seek to purchase an accessible vehicle or retrofit a vehicle.

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65.

Section 5(h) of the Hail Act provides that "the city of New York, acting through

the TLC, is hereby authorized and empowered to take such actions as are necessary and desirable to implement the provisions of this section [authorizing the issuance of HAIL Licenses] and section nine of this act [creating an accessibility plan] subject only to the procedures and limitations set forth in this act, and shall not be required to engage in any review provided for by any provision of law or make or obtain any determination not expressly required by this act." 66. The Legislature never conducted an environmental assessment or review of the

impact of adding 18,000 HAIL Licenses and 2,000 medallions taxicabs on traffic, air quality, or on the economics of the taxi or for-hire industries. Indeed, it declared that none was required. As detailed above, the expected adverse economic impact is significant, and the impact upon traffic and air quality will also be negative, and possibly severe. 67. The Hail Act provides that if any part is adjudged invalid, "the remainder of this

act shall be invalidated and shall be deemed to have not taken effect." Accordingly, each and everyone of the infirmities described herein requires the entire Hail Act to be held invalid.

FIRST CAUSE OF ACTION (Article IX, Section 2 of the N.Y. State Constitution; Home Rule Provision)
68. herein. 69. Article IX, § 2(b)(2)(a) of the New York State Constitution provides that "(b) '" Plaintiffs repeat and re-allege the preceding paragraphs as though fully set forth

the legislature ... (2) Shall have the power to act in relation to the property, affairs or government of any local government only by general law, or by special law only (a) on request of two-thirds of the total membership of its legislative body or on request of its chief executive concurred in by a majority of such membership."

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70.

The State Constitution defines a "special law" as "[a] law which in terms and in

effect applies to one or more, but not all, counties, counties other than those wholly included within a city, cities, towns or villages." 71. The State Constitution defines a "general law" as "[a] law which in terms and in

effect applies alike to all counties, all counties other than those wholly included within a city, all cities, all towns or all villages." 72. The Hail Act is a "special law" because it applies only to New York City, and

regulates activities exclusively within New York City. The prelude to the Hail Act states that it is an act "relating to livery permits in the city of New York." The Hail Act will have a substantial impact within New York City and little, if any, effect elsewhere. 73. There is no substantial State concern justifying passing the Hail Act without a

Home Rule message. The Hail Act does not reasonably relate to any substantial State concern. The purported State concern cited by the Legislature that people throughout the state visit New York City is insubstantial, and would allow the State to regulate every single aspect of New York City's affairs if the stated interest was a valid substantial state interest. 74. The State Constitution grants to local governments, including the City of New

York, the right to govern their affairs with respect to matters of local concern. Furthermore, the State Constitution permits local governments to enact Charters setting forth the division of powers between an executive, such as a Mayor, and an elected City Council. The State Constitution permits local governments to enact ordinances regulating local affairs. 75. The State Legislature has, for more than fifty years, acknowledged that the

licensure and regulation of taxicabs and other vehicles for hire is a local, rather than a state concern. See Gen. Mun. Law § 181. Notwithstanding the State Constitution and provisions of

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law acknowledging that the regulation of taxicabs and other forms of for-hire transportation is a local concern, the Hail Act usurps licensing and regulatory authority over the New York City taxicab and for-hire industries. Pursuant to State law and the City Charter, such authority resides exclusively and traditionally in the New York City Council. The Hail Act unconstitutionally transfers this authority to the Mayor of the City of New York, acting alone or through, the TLC, which he controls, effectively abrogating the authority of the City Council over a matter of purely local concern. 76. The City Council never passed a Home Rule message. As a result, the State

Legislature was not acting "on request of two-thirds of the total membership of its legislative body or on request of its chief executive concurred in by a majority of such membership" as required by the State Constitution to pass a "special law." 77. The Hail Act infringes upon the City's "power to act in relation to the property,

affairs or government of any local government" guaranteed by the State Constitution. 78. Specifically, the Hail Act infringes on the City's right to pass laws related to the

"powers [and] duties ... of its officers," Art. IX, § 2(c)(I). 79. In contrast with the Hail Act, and in compliance with the City Charter, on at least

three occasions the City Council has passed local laws that prohibit any for- hire vehicles other than medallion taxis from accepting hails from passengers on the street. See N.Y.C. Admin. Code § 19-504(a)(1) ("No motor vehicle other than a duly licensed taxicab shall be permitted to accept hails fro l l i passengers in the street"); id. § 19-507(a)(4) ("No driver of a for-hire vehicle shall accept passengers unless the passengers have engaged the use of the for- hire vehicle on the basis of telephone contract or prearrangement"); id § 19-516(a) ("For-hire vehicles may accept

passengers only on the basis of telephone contract or prearrangement").

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80.

The provision of the Hail Act providing that the "TLC is hereby authorized to

issue" "up to" 18,000HAIL Licenses that authorize non-taxicab drivers to accept hails from passengers on the street seeks to preempt these three City laws. 81. The Hail Act also provides that the Mayor "acting ... alone" can issue "up to two

thousand" accessible taxicab licenses (medallions) in contravention of § 2303(b)(4) ofthe City Charter. 82. Previous issuances of new taxicab medallions, in 1996 and 2003, have been

accomplished through Administrative Code amendments, which were passed by the City Council. Under the New York City Charter, new medallions can be issued solely by local law. Under the General Municipal Law, the power to issue taxicab licenses resides with, inter alia, cities. This power is not granted to the executive within a city, but can be exercised only through the enactment of ordinances. The Hail Act further unconstitutionally usurps the authority of the City Council, and of New York City to enact ordinances, by transferring power vested in the legislative branch to the executive branch of New York City government. 83. The Hail Act Law grants the Mayor and the TLC- an administrative agency of

NYC that is controlled by the Mayor-- the power to overturn validly enacted local laws. Indeed, the Hail Act explicitly amends New York City's local laws, namely Administrative Code §§ 19506, 19-507, 19-512.1, and 19-516, which are matters of clearly local concern. 84. Finally, the Hail Act Law provides that the TLC "shall not be required to engage

in any review provided for by any provision of law or make or obtain any determination not expressly required" in the Hail Act. 85. On its face this potentially infringes on yet another City concern, with no

articulated state interest in doing so. The City Administrative Code § 19-532(c) provides that in

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the event additional taxicab licenses are issued "such additional licenses shall be issued by the commission only after completion" of a review pursuant to "the New York state environmental conservation law." Insofar as the HAIL Act dispenses with or limits the requirements of review pursuant to the New York state environmental conservation law, particularly with respect to the issuance of the HAIL licenses, that is yet another violation of New York City's right to Home Rule. 86. Constitution. 87. Plaintiffs will be harmed by this law unless this Court annuls, enjoins and/or The Hail Act violates the Home Rule Provision of the New York State

declares the Hail Act unconstitutional, null and void, and invalid. 88. 89. Plaintiffs have no adequate remedy at law. By reason ofthe foregoing, Plaintiffs are entitled to an order (i) declaring that the

Hail Act violates the Horne Rule provision of the New York State Constitution, and (ii) preliminarily and permanently enjoining the defendants from taking any action pursuant to the Hail Act, including but not limited to, issuing HAIL Licenses, HAIL Base permits, new taxicab medallions, or regulations enacting the Hail Act.

SECOND CAUSE OF ACTION (Article III, Section 17 ofthe N.Y. State Constitution; Exclusive Privileges Provision)
90. herein. 91. Article 3, Section 17 of the New YorkState Constitution provides in relevant part Plaintiffs repeat and re-allege the preceding paragraphs as though fully set forth

that the "legislature shall not pass a private or local bill in any of the following cases: ... Granting to any private corporation, association or individual any exclusive privilege, immunity; or

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franchise whatsoever." 92. Section 5 of the Hail Act provides that for three years, HAIL Licenses may be

issued only to holders of for-hire vehicle licenses or drivers who are in good standing and have been licensed for at least one year. The privilege of HAIL License ownership is unavailable to anyone who is not part of that privileged group. For example, this group does not include taxicab drivers or owners, such as Plaintiff. Nor does it include any private citizens who wish to purchase HAIL Licenses. 93. The TLC has estimated that half of its licensed for-hire vehicle pool engages in

some form of unlawful street hail activity. These are lawbreakers, who have violated § 19-506 of the Administrative Code, which provides that accepting an illegal street hail is a criminal misdemeanor. The fact that a license is considered to be in good standing, does not guarantee that the license holder has not violated the law. Licensees are in good standing so long as they have paid the fines assessed against them. Yet, rather than punish these lawbreakers, the Hail Act rewards them. At the same time, it denies benefits to others outside this privileged group who have complied with the law. 94. 95. The privilege of HAIL License ownership is highly valuable. First, HAIL Licenses will be offered by the TLC at a cost far less than the cost of

taxicab medallions. Each HAIL License will cost $500 in the first issuance, $3,000 in the second issuance and $4,500 in the third issuance. This is far below the cost of a medallion, which has recently sold for up to $1 million per medallion. Indeed, Bloomberg's 2013 budget recently projected that each accessible medallion would be sold for an average of $500,000. 96. For a cost of as little as $1,500, a member of the privileged group can obtain the

right to cruise for and accept street hails, a privilege that has been limited to the drivers of yellow

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taxicabs, whose owners have spent hundreds of thousands of dollars for their medallions. Medallion owners have heretofore had the exclusive right to accept street hails in all five boroughs of New York City, and they frequently accept street hails outside central Manhattan. Under the Hail Act, medallion owners are forced almost entirely to cede this once exclusive right to the holders of HAIL Licenses. 97. Second, the privilege of owning a HAIL License is transferable to any owner of a

for-hire vehicle licensed by the TLC or any licensed for-hire driver. HAIL licenses will acquire considerable value after issuance. There is no requirement that a licensee drive a HAIL vehicle. These licenses can be held purely as an investment and be transferred after they have appreciated in value. After a transfer, there is no requirement that the purchaser have been licensed for at least a year. 98. Thus, through the Hail Act, the State Legislature is offering current for-hire

vehicle drivers and owners exclusive rights to purchase valuable, transferable licenses at very low prices. The law then grants to the privileged group the right to trade these licenses on the open market which, since they are limited in number, will provide substantially increased value .. Only those within the privileged group are eligible to obtain these HAIL Licenses at the current, low value and reap the tremendous benefits of HAIL License ownership. 99. Third, the privileged group can retain that privilege for life. The Hail Act

provides that though the licenses are for three-year terms, the right to renewal is "automatic" upon payment of the renewal fee for every owner in good standing. 100. The exclusive grants to the privileged group violate the New York State

Constitution's prohibition on monopoly rights. Specifically, the state-mandated grant of an exclusive (and valuable) right to a specified group violates Article III, Section 17 of the

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Constitution, which provides that the "legislature shall not pass a private or local bill in any of the following cases: ... Granting to any private corporation, association or individual any exclusive privilege, immunity, or franchise whatsoever." 10 1. As a result of this unconstitutional limitation on who can purchase HAIL Licenses or HAIL base permits, medallion owners such as Freidman and other members of the GNYTA are doubly harmed by the Hail Act. Not only are they financially injured because the law authorizes up to 20,000 new competitors for street hail business, in contravention of legal safeguards ensuring that medallion owners possess that right exclusively, medallion owners are also unconstitutionally barred from entering potentially lucrative new HAIL License business. 102. Freidman, andlor entities where Freidman is a principal, desires to purchase HAIL

Licenses and HAIL Base permits. 103. The HAIL Act is thus unconstitutional pursuant to Article III, Section 17 of the

New York State Constitution. 104. Plaintiffs will be harmed by this law unless this Court annuls, enjoins andlor

declares the HAIL Act unconstitutional, null and void, and invalid. 105. 106. Plaintiffs have no adequate remedy at law. By reason of the foregoing, Plaintiffs are entitled to an order (i) declaring that the

Hail Act violates the Exclusive Privileges provision of the New York State Constitution, and (ii) preliminarily and permanently enjoining the defendants from taking any action pursuant to the Hail Act, including but not limited to, issuing HAIL licenses, HAIL base permits, new taxicab medallions, or regulations enacting the Hail Act.

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THIRD CAUSE OF ACTION (Violation of N. Y. Const. Art. I, §7)
107. 108. Plaintiffs repeat and re-allege the preceding paragraphs as if fully set forth herein. Under the Takings Clause of Article I, Section 7 of the New York Constitution,

private property shall not be taken for public use without just compensation. 109. The Hail Act will have a significant economic effect on the owners and operators

of taxicabs and licensed for-hire vehicles in the City of New York, which will result in the taking of their property without just compensation. The HAIL Act is contrary to the justified expectations of medallion holders, who reasonably relied on the long-standing legal protections providing medallion holders the exclusive the right to pick up passengers by street hail. Moreover, the Hail Act represents the largest increase in the number of available medallions in 75 years, further diluting the value of each medallion. 110. The Hail Act threatens to dramatically devalue taxicab medallions and upset

investment-backed expectations. In the long run, medallion prices can be expected to fall between 29% and 54% by reason of the Hail Act and the lack of enforcement by the TLC. 111. Thus, the law threatens the livelihood of medallion owners, many of whom are

individual owner-drivers and small business owners who have their life savings and retirement plans tied up in the medallion industry. Indeed, the credit unions and banks that have financed medallions in the past have warned the State Legislature and the City of New York that existing medallion values will be diminished by the Hail Act. A number of these lenders have already filed a lawsuit challenging the HAIL Act as an uncompensated, unconstitutional taking. 112. At the time each of the owners represented by Plaintiff GNYT A purchased their

medallions, the Administrative Code provided that only drivers of medallion taxicabs could

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lawfully accept street hails. Furthermore, in written materials distributed by the TLC in connection with the medallion sales between 1996 and 2006, the TLC made representations, intended to be relied upon by auction participants, to the effect that taxicab medallions grant their owners the exclusive right to accept hails from passengers. These representations were also made in public information seminars conducted by the TLC. These representations were also a reiteration of local law in effect for a half-century. Plaintiffs relied upon such representations by the City and the TLC both with respect to making a decision to purchase a medallion, and in determining the amount to offer for said medallion. 113. At the time Freidman purchased his medallions from the City, the Administrative

Code provided that only drivers of medallion taxicabs could lawfully accept street hails. In written materials distributed by the TLC in connection with Freidman's purchases in 2003 and 1996, the TLC made representations, relied on by Freidman, that taxicab medallions grant their owners the exclusive right to accept street hails from passengers. 114. Yet the Hail Act permits HAIL License holders to pick up passengers outside of

Central Manhattan, including in areas where taxicab drivers pick up street hails. Profit-seeking HAIL Licensees will also, illegally, pick up passengers in central Manhattan and at the airports without prearrangements. 115. For decades the defendants have failed to enforce the current rules that prohibit

illegal street hails in Manhattan. Further, the TLC has stated that it has no intention of altering its enforcement strategies. Finally, the number of increased enforcement agents falls far below what is necessary to properly enforce the Hail Act's provisions. 116. As a result, the existence of HAIL License vehicles will increase the fare-

poaching epidemic, further decreasing the value of medallions. In addition, due to lack of

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enforcement, the poaching livery cars will likely not have working meters, GPS, or credit card machines. This unfair competition will further greatly reduce the value of medallions. 117. The Hail Act eliminates medallion owners' exclusive right to accept street hails

within each of the five boroughs of New York City by authorizing 18,000 new HAIL License holders to enjoy the same rights. It dilutes the value of medallions by issuing 2,000 new accessible medallions. When the law is fully implemented, there may be more HAIL Licensed cars than medallion taxicabs accepting hails from passengers on the streets of New York. Medallion taxicabs will compete for a limited number of fares in Central Manhattan and at the airports, while HAIL permit vehicles accept street hails from the remainder of the City, without surrendering their right to accept pre-arranged fares from bases, if they so choose. 118. One expert has estimated that the average number of fare-paying medallion taxi

rides per shift will decline by nearly 20% by reason of the Hail Act. 119. The Hail Act imposes on medallion owners alone the costs of improving outer-

borough and handicapped street hail access in New York City. 120. Constitution. 121. Defendants must provide just compensation to GNYTA for any taking caused by Imposing these costs constitutes a taking under Article I of the New York

the Hail Act, including by the City's issuance of Hail licenses and new yellow taxi medallions, which will greatly reduce the value of the current medallions that were purchased from the City based on assurances that only medallion cabs could be hailed within the entire city of New York. 122. 123. Plaintiffs have no adequate remedy at law. By reason of the foregoing, Plaintiffs are entitled to an order (i) declaring that the

Hail Act violates the Takings provision of the New York State Constitution, Art. I, §7, and (ii)

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preliminarily and permanently enjoining the defendants from taking any action pursuant to the Hail Act, including but not limited to, issuing HAIL Licenses, HAIL base permits, new taxicab medallions, or regulations enacting the Hail Act.

FOURTH CAUSE OF ACTION (Violation of SEQRA)
124. 125. Plaintiffs repeat and re-allege the preceding paragraphs as if fully set forth herein. Under Article 8 of the New York State Environmental Conservation Law and the

rules promulgated thereunder ("SEQRA"), agencies must engage in an environmental quality . review process for certain non-ministerial actions. 126. Both the issuance of new medallions and the issuance of HAIL Licenses are

actions requiring compliance with SEQRA. 127. 128. The Hail Act does not exempt these actions from the requirements of SEQRA. Under Title 6, Part 617 ofthe New York Code, Rules and Regulations (the

"SEQRA Rules") and Title 62, Chapter 5 of the Rules of the City of New York (the "CEQR Rules"), the TLC has initiated SEQRA review for the pending medallion issuance. 129. On March 12, 2012, the TLC issued a "positive declaration" requiring that an

Environmental Impact Statement be produced before the City can issue any of the 2,000 yellow taxi medallions authorized by the Hail Act, based on an Environmental Assessment Statement that identified a number of areas of potential significant adverse environmental impact, including: air quality; noise; socioeconomic conditions; transportation; public health; and neighborhood character. 130. By March 22,2112, the TLC had made a final determination that it would not

perform SEQRA review of the issuance of 18,000 HAIL Licenses authorized by the Hail Act.

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131.

An agency action must be invalidated if it is arbitrary and capricious, or otherwise

contrary to law. 132. It is arbitrary and capricious, and contrary to law, to undertake an environmental

review of the impact of 2,000 new medallions on the basis of potential significant adverse environmental impacts, but not to undertake a similar review of the impact of 18,000 new HAIL Licenses. 133. The Hail Act and the lack of enforcement of its provisions will inevitably lead to

increased traffic and congestion in Manhattan's central business district. This will lead to damage to worker productivity, the New York City environment, and loss of medallion value. 134. Finally, the TLC has proposed rules that require the livery hail licensed cars to

undergo emissions testing only twice a year, while the newer, more efficient, and environmentally friendly medallion cabs are required to be tested three times a year. 135. It is arbitrary and capricious to require older, less efficient cars to be inspected

less often than newer, more efficient cars. 136. 137. Plaintiffs have no adequate remedy at law. By reason of the foregoing, Plaintiffs are entitled to an order (i) invalidating the

TLC's decision not to perform a SEQRA review of the 18,000 new HAIL licenses, and (ii) preliminarily and permanently enjoining the defendants from taking any action pursuant to the Hail Act, including but not limited to, issuing HAIL Licenses, HAIL base permits, new taxicab medallions, or regulations enacting the Hail Act.

FIFTH CAUSE OF ACTION (Ultra Vires) 138. Plaintiffs repeat and re-allege the preceding paragraphs as if fully set forth herein.

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139.

The rules promulgated by the TLC to implement the Hail Act are in contravention

of andlor beyond the power granted to the TLC under the Hail Act. 140. The TLC has promulgated a number of rules relating to the Hail Act's

implementation. Indeed, as late as May 17, the TLC was still proposing amendments to the rules, which is a clear sign of the difficulty the TLC faces in implementing and enforcing the Hail Act's provisions. In fact, the hearing to consider these amendments is not scheduled to take place until June 21, even though the TLC plan to begin selling HAIL Licenses on June 2. 141. A major issue involves how the TLC will ensure that 20% ofthe Hail Licenses are

associated with cars that are handicap accessible. The law mandates that before additional Licenses can be issued, 20% of the already-issued licenses must have accessible cars. The TLC rules provide for grace periods that are in contravention of the terms of the Hail Act. 142. The proposed rules would also give improper benefits to Paratransit bases that

obtain HAIL Base permits and designate a number of their ambulettes as Hail Liveries. The ambulettes are already handicap accessible and would count toward achieving the 20% requirement. the vehicles. 143. There is no authority in the Hail Act for selling HAIL licenses to Paratransit For example, the rules eliminate the retirement age and mileage requirements of

companies because they are not currently-licensed livery drivers. The law requires one HAIL License per licensee, and does not authorize Paratransit Bases to have any HAIL Licensed vehicles. 144. The TLC is proposing these rules in an attempt to circumvent the Hail Act's

requirement that 20% of the HAIL Licensed cars be handicapped accessible. 145. The TLC rules include ambulettes in determining whether 20% of hail livery

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licensed cars are handicap accessible even though as a practical matter no ambulette is going to pick up a street hail passenger. 146. 147. 148. As a result the rules are ultra vires. Plaintiffs have no adequate remedy at law. By reason of the foregoing, Plaintiffs are entitled to (i) an order declaring that the

rules promulgated by the TLC to implement the Hail Act are unauthorized and beyond the power of the TLC as provided by the Hail Act, and (ii) enjoining the defendants from enforcing the proposed rules to implement the Hail Act.

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RELIEF
Plaintiffs respectfully request that this Court grant the following relief: a) b) To annul, vacate, and set aside the Hail Act; A declaratory judgment that the Hail Act violates the New York State Constitution, and that the TLC regulations promulgated thereunder are without effect; c) To preliminarily and permanently enjoin the defendants from taking any action pursuant to the Hail Act, including but not limited to, issuing HAIL Licenses, HAIL Base permits, new taxicab medallions, or regulations implementing the Hail Act; and d) Such other relief that may be considered appropriate under the circumstances, including attorneys' fees and costs of this action to the extent allowed by law. Dated: New York, New York May 24,2012